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RECORD AND GUIDE
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Communications should he addressed to
C. W. SWEET
Vublisfied Every Satardap
By THE RECORD AND GUIDE CO.
President, CLINTON W. SWEET Treasurer, P. W. DODGE
'Vlcs-Pres. 6. Genl, Mgr., H. W. DESMOND Secretary, F. T. MILLER
Nob. 11 to 15 East 24tli Street, New York City
(Telephone, Madison Square, 4430 to 4433.)
"Entered, at the Post Office at Nets York, N. T., as second-eliiss yiiattcr."
Copjrighted, 1008, by Tha Record &, Guide Co.
Vol. LXXXl.
APRIL 25. 1908.
No. 2093.
THE most encouraging aspect of the present business
situation is undoubtedly tiie increasing ease' with
whicli railroads are beginning to float new issues of securi¬
ties. The success of the Pennsylvania Company in placing
$40,000,000 of bonds is conclusive upon this point; and
the inevitable result of this ability on the part of the rail¬
roads to obtain the money necessary for improvements will
stimulate the gradual resumption of such operations and
the consequent revival of general business. There is not
a iarge railway system in the country that was not obliged
last fall to shut do-wn on extensions and improvements, nec¬
essary either to develop traffic in sight or to handle in a
more economical way existing traffic, and the managers of
these corporations 'will understand how desirable it is to
resume such improvements during a period of slack busi¬
ness. Fortunate indeed is the corporation or the individual
who can afford to place permanent improvements ou their
properties at a time like the present. The majority of busi¬
ness men are obliged to do tbeir building when labor,
materials and money are all expensive; but the economical
time to build is when labor, materials and money are rela¬
tively cheap. All these necessary implements of large con-
structural operations, while not so cheap as they were
so-me years ago, are assuredly less expensive than they were
last year, and are also less expensive than they will become
a year or two from now. The present is the time to place
improvements upon property—even il such improvements
do not offer an immediate opportunity of large proflts. The
people, who make money in good times, are the people,
like Mr. Carnegie, who can afford to prepare during bad
times for the inevitable recurrence of greater business ac¬
tivity. It is scarcely necessary to add that this principle
applies just as much to house-builders as it does to rail¬
roads. The man who has the money to make a desirable
improvement to a piece of real estate during the coming
summer will make more money than the man who prefers
or is obliged to wait a year or two. The quoted prices for
labor and materials offer no-accurate indication of cheap¬
ness of contemporary building operations compared to
what they were a year ago. A shrewd purchaser, with
cash to pay, can obtain bargains in almost every service
or material he needs, and his building will cost him a
substantially smaller sum than the buildiugs with which
it competes. He can afford, consequently, to get along
with only a lew tenants for a while, because he knows tbat
when his building does fill up he will he earning a much
higher percentage on his improvement than will his neigh¬
bors who made their improvements either at an earlier or
a later date.
THE proposed amendments to the Rapid Transit Act
have passed the Legislature; and while there is no
reason to suppose that they will not meet with the Gov¬
ernor's approval, property owners should not cease to ex¬
ercise effective influence until the lines are actually in
course of construction. Every property owuer must un¬
derstand how much hangs upon the early coustruction of
new longitudinal subways. They are necessary for the
Bronx, or else that borough will lose to Brooklyn and
Queens thousands of inhabitants, which would otherwise
have contributed to the prosperity of its business and the
value of its real estate. They ■ 'are just as necessary to
Manhattan, because 'without additional underground roads
the increased business created by improved means of transit
to Long Island and New Jersey cannot be properly handled.
As soon as uew subway contracts are let, if not before, real
estate speculation will revive; and the millious spent upou
the actual construction will help to stimulate local business
by giving employment to thousands ol unemployed laborers.
Neither is there any reason to suppose that the terms which
the Public Service Commission will be in a position to offer
purpose. A contract extending flfty years should be an
purpose. A contract extending fifty years snould be an
extremely profitable one for any corporation able to meet
the necessary conditions. Every dollar invested in such a
road would be returned two or threefold to its owners, and
by the time th^ Commission is ready to advertise for bids
there should be plenty of money available for investment
in such au enterprise. Capitalists will not forget that the
Interborough Company, before its fatal alliance 'with the
New York City Railway Company, was one of the best and
most profitable railway properties in the United States,
and a fifty-year franchise, offered in 1908, should look much
more attractive thau did a seventy-flve year franchise offered
ten years ago. If the bill becomes a la'w, as it probably
will, the early construction of new subways by private
capita! is almost a certainty, and the only cloud upon the
situation "^^'ill be the doubt whether the Interborough Com¬
pany will be able to raise the capital wbich would enable
it to be an effective competitor for the new franchises.
THE proposal to exempt bonds issued for the construc¬
tion of subways from inclusion in the debt limit
met with less -opposition in the Legislature thau was
expected. The prospects are good that it 'will he approved
by the next Legislature, and also that it will finally
be endorsed by popular vote in the lall of 1908; and if
this result is ever brought about, it will emancipate the
city from a restriction wbich gravely embarasses its free¬
dom of action. For the last fifteen years the inability of the
city to issue bonds for subway purposes has been a hindrance
to the construction of an improved rapid transit system. The
impediment has been evaded by various devices, but the
time has come when sucii devices will no longer serve. At
present the city cannot build subways without depending
exclusively on private capital; and, of course, capitalists
under such conditions will exact terms favorable to them¬
selves. It is much better at the present time to pay the price
which is necessary to tempt private capital to lend its as¬
sistance, but the city must not continue to be placed in such
a position. It must be free to build the subways it needs
whenever its interests demand such action; and the only
way such freedom can be obtained is to place bonds issued
for subway construction in the same class as bonds issued for
improving our municipal water supply. Plenty of subways
are just as vital to the city's prosperity as is plenty of water.
Money invested in the former offers a larger percentage of
profit, and it is absurd as a matter of accounting to charge
the bonds issued for a remunerative subway as a liability
without charging the subway itself as an asset. It was Mr,
Bird Coler wlio first denounced the absurdity of such a
method of bookkeeping, and if this financial reform is ever
consummated he will deserve a large share of the credit at¬
taching to it.
-----------*-----------
WHATE'VER may be thought of Mr. Thomas F. Ryan's
defence of the financing of the Metropolitan Street
Railway system, it is at least conclusive upon one point.
The financial methods of the managers of the property were
not the most important cause of the receivership. At the
time when the system was in process of formation and when
its existing financial burdens were placed upon it, its man¬
agers counted upon an increase in business and income sim¬
ilar to the increase iu business and income which had taken
place during the earlier years of the history of the consoli¬
dated system. If such an increase had occurred, the earnings
of the street railways would have been abundantly sufficient,
not only to pay all fixed charges and the regular dividends,
but also the additional burden of taxation imposed upon the
property. It was the necessity of paying increasing charges
and burdens out of what was practically a stationary income
which caused the bankruptcy of the corporation. The capi¬
talization had been based upou what seemed to be a reason¬
able anticipation of increasing earnings, and when no in¬
creasing earnings occurred, the result was necessarily a re¬
ceivership. Mr. Ryan, in his defence, charges the diminished
income chiefly upon the undue extension of the transfer sys¬
tem; and many newspapers have agreed with bii^ that the